Bankruptcy sometimes seems like the only way out. Like death to a weary body, this would seem like a well-deserved release after a huge and emotionally draining battle to stay afloat financially. There may be a point sometimes when you might say, "Oh, what the heck – I cannot do it anymore!" and choose to declare bankruptcy instead of trying to balance your finances any further.
1. You CAN Do It!
First of all, you need to believe that you can do it. Look around you – people who are successful millionaires always believed that they could overcome the worst. No matter how many times they failed, they picked themselves up and started again with the full conviction that they can achieve what they set out to do.
For example, consider Abraham Lincoln from the past and Warren Buffet and Donald Trump from the today’s world. They suffered terrible failures in their respective lives, but kept on walking on the path they chose. They never faltered in their belief that they can.
2. Earn More Rather Than Cut Expenses
The first advice that any credit repair agent or counseling service will give is to cut down on frivolous expenses. While this is exceptionally sound advice that needs indeed to be followed, it is also very difficult to apply.
Cutting down expenses involves a drastic change in your lifestyle, which is often more difficult than it seems. This is why most people are unable to stay on the budget they envisage for credit repair tasks.
It's better to apply your efforts to increase your income. This is definitely not hard. You can always use 2-3 hours that you would have otherwise used unproductively, to work a little extra and complement your income. Increasing your income is better than cutting down costs as this will boost your morale; living on a austere budget on the other hand will send most people into depression.
3. Continuously re-negotiate loans
A vital secret in staying afloat in the credit world is to keep seeking ways to cut down your interest payments and liabilities. Research constantly and re-negotiate immediately with your creditor when you find that the market offers lower interest rates than you are paying.
Do not hesitate to shift your account to a credit provider that offers better terms. Even if it's a difference of 0.5% - this will add up to a tidy sum when the payments span over 2-3 decades. Ensure that your credit cards are always paid in full as these will be the payment with the highest interest rates.
Do not use credit cards unless there is a dire emergency; even so, when the bill is presented pay it in full. Make it a habit to use debit cards instead of credit cards – in this way you will not risk over-spending and highest interest rate loans.
If you take care of these three steps, you would find that your financial position is not that bad. Bankruptcy is always a bad idea since it will brand you negatively for more than a decade. This “relief” comes costly. Avoid it as best as you can!